Module 5 - Building your Value PropositionRobert Preston

Breakout is an Epi-V initiative, delivered by Transitions.

Drill Faster

Last longer

Go further

Superiordurability

Superiorstability

Superiordrilling

New Technology for record-breaking performance

“depth of cut and incomparable wear resistance deliver extended operating life and accelerated rates of

penetration that can save you days”

Where does does the value proposition reside

3

Customer Analysis

Internal Analysis

Competitive Analysis

Definition of market segments

Target Markets

Value Proposition

Differentiating factors

Strategic Positioning

Marketing Strategy / Plans

1) 2) 3) 4)

4

.51.0

1.5

2.02.5

3.0

Price ($)

10

20

40

50P

erce

ived

V

alu

eA

B

C

A

Weighting Attributes ProductsA B C

25 Durability 40 40 2030 Reliability 33 33 3330 Delivery 50 25 2515 Service quality 45 35

20Perceived value (41.6)(32.6)(24.9)Equilibrium price $2.5 $2.0 $1.5

If company A reduces price they will gain market share,would B and C?

Value Pricing

1. Conceptualise value

• What is value

• What constitutes a customer value proposition

• What makes value proposition persuasive

5

?

Six steps to achieving superior value

6

1. Conceptualise

value

2. Formulate value

propositions

3. Substantiate value

propositions

4. Tailor market offerings

6. Profit from value provided

5. Transform sales effort

Six steps to achieving superior value

Must haves

• Segmented target markets defined

• Knowledge of customer value creation in practice

• Integrated implementation, not marketing spin

7

1. Conceptualise

value

2. Formulate value

propositions

3. Substantiate value

propositions

4. Tailor market offerings

6. Profit from value provided

5. Transform sales effort

8

“Price is what you charge and value is what others think its worth”

Warren Buffett

Why a Value Proposition

9

Valuedelivered

Perceived value

What benefits the seller promises the customer

What the customer is willing to pay for the perceived benefits

Seller Buyer

value transfer

1. Conceptualise value

10

Titanium dioxide

• A pigment that;-

• whitens, brightens and opacifies

• improves dispersability by reducing the time to reach 7 hegman fineness from 30 to ten mins using a Cowles high-speed dispenser

• Improves gloss from 78 to 86 60° gloss units

Needs a common denominator ?

Needs a common denominator ?

1. Conceptualise value

11

“Value in business markets is the worth in monetary

terms of technical, economic, service, and social

benefits a customer business receives in exchange for

the price it pays for a market offering”

1. Conceptualise value

12

Some guiding principles

1.Value is expressed in monetary terms, dollars per unit, euros per hour

2.Market offering are represented in technical, economic, service, and social benefits

3.Price is only what the customer pays for the perceived value, it is not a value

4.Customer value is comparative concept, there is always an alternative

Six steps to achieving superior value

Must haves

• Clear definition of differentiated customer value benefits

• Value word equation

13

1. Conceptualise

value

2. Formulate value

propositions

3. Substantiate value

propositions

4. Tailor market offerings

6. Profit from value provided

5. Transform sales effort

Defining superior customer value benefits

14

Low

High

Rel

ativ

e le

velKey attributes of product, service, delivery benefits

1 2 3 4 5

Company 1

Company 2

Questions1. What factors should be raised well

beyond the industry standards ?

2. What factors should be created that the industry has never offered ?

3. What factors should be eliminated that the industry has for granted ?

4. What factors should be reduced below the industry standards ?

Plotting the value attributes of the business relative to its competitors determines areas of competitive advantage and differentiation

Three value propositions

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Valueproposition

Value Proposition consists of

Answers the customer question

Has the potential pitfall

It requires

All benefits customers receive from our offering

“Why should our firm purchase your offering

Benefit assertion

Knowledge of own market offering

All favourable points of difference an offering has relative to the next best

alternative

“Why should our firm purchase yours instead of

our competition”

Value presumption

Knowledge of own offering and next best alternative

1. All benefits2. Favourable points

of difference3. Resonating focus

The one or two point of difference whose

improvement will deliver the greatest value to the

customer for the foreseeable future

“What is most worthwhile for our firm to keep in mind

about your offering”

Customer value research & insight

Knowledge of how own market delivers superior

value to customers, compared to the next best

alternative

Three value propositions

Valueproposition

1. All benefits

All benefits customers receive from our offering

“Why should our firm purchase your offering

Benefit assertion

Knowledge of own market offering

2. Favourable points of difference

All favourable points of difference an offering has relative to the next best

alternative

“Why should our firm purchase yours instead of

our competition”

Value presumption

Knowledge of own offering and next best alternative

3. Resonating focus

The one or two point of difference whose

improvement will deliver the greatest value to the

customer for the foreseeable future

“What is most worthwhile for our firm to keep in mind

about your offering”

Requires customer value research & insight

Knowledge of how own market delivers superior

value to customers, compared to the next best

alternative

16

Value Proposition consists of

Answers the customer question

Has the potential pitfall

It requires

Questions the value proposition must answer

• What does the value proposition consist of?

• What customer question is the suppliers attempting to answer with the value proposition?

• What is required for a suppliers to construct the value proposition and for the sales force to deliver it?

• What is the potential pitfall of the value proposition?

17

Six steps to achieving superior value

Must haves

• Processes in place to demonstrate, record and document value creation

• Customer cooperation

• Case studies, case studies, case studies

18

1. Conceptualise

value

2. Formulate value

propositions

3. Substantiate value

propositions

4. Tailor market offerings

6. Profit from value provided

5. Transform sales effort

The need to quantify how customer value is created

Example ; Pump suppler

• kW spent number of operating hours per year $ per kW hour number of years systems solution in operations (our solution)

• kW spent number of operating hours per year $ per kW hour number of years systems solution in operations (market average)

• *kW spent = unit horse power 0.746 (horsepower into electricity) 1/unit efficiency

19

GE Value calculator

20

3. Substantiate value propositions

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Credibility is achieved by not telling fairy stories but working with the customer to document the actual value created

Breakout session – design a value proposition using the supplied product

Six steps to achieving superior value

Must haves

• Create naked solutions with options...no more free engineering

• Sell on value, not price

23

1. Conceptualise

value

2. Formulate value

propositions

3. Substantiate value

propositions

4. Tailor market offerings

6. Profit from value provided

5. Transform sales effort

Core offeringCore offering

Tailor market offerings – augmenting offerings

24

Core offering

ServicesAvailability assuranceEmergency responseInstallation/deploymentTrainingMaintenanceDisposalManpower

EngineeringProject managementSpecification changesTechnology integration

Six steps to achieving superior value

25

1. Conceptualise

value

2. Formulate value

propositions

3. Substantiate value

propositions

4. Tailor market offerings

6. Profit from value provided

5. Transform sales effort

26

Strategic Positioning…bringing it all together

Strategic Positioning

27

Customer Analysis

Internal Analysis

Competitive Analysis

Definition of market segments

Target Markets

Value Proposition

Differentiating factors

Strategic Positioning

Marketing Strategy / Plans

1) 2) 3) 4)

The Chosen Battle Ground

Competitor

Competitor

Competitor

Competitor

Competitor

My Business

Competitor

Market Share

My Business

Mind Shareversus

The Chosen Battle Ground

Market Share

• What we do talks

• Promotes Comparison,

not differentiation

• Under values our offer

• Price competition

• One of the pack

Mind Share

• Talks to the customer

• Promotes know how• Takes ownership of a

selected context• Promotes

differentiation

• Promotes leadership

versus

The Chosen Battle Ground

Strategic Positioning

The building blocks

• Corporate objectives

• Segmentation

• Value Proposition

• Brand behaviour / Customer Relationships

• Visual brand application

• Measurement & evaluation